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[music] >> Hello I'm Anthony Okolie in for Greg Bonnell and welcome to MoneyTalk Live brought you by TD Direct Investing.
Every day we will be joined from guests across TD and beyond. We we'll take you through it's moving the markets and answer questions about investing.
Coming up on today's show we will be joined by Argus research Pres. John Eade discussed the possible scenarios he sees ahead for the markets.
And in today's WebBroker education segment, Caitlin Cormier will take us through the different order types available on WebBroker.
And here's how you can get in touch with us. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to our guest today let's get you an update on the markets.
We will start here in Canada where the markets are opening up into positive territory. The S&P TSX Composite Index is currently trading up 67 points. About .
3% of course driving the early gains our energy and technology stocks. Also the positive inflation data that we received on Tuesday as fuel in hopes that the Bank of Canada is nearing the end of its interest rate hiking cycle.
Let's take a look at some of the big movers today.
One of the big movers today is Baytex energy Corporation and shares of Baytex are currently trading higher.
Of course today crude prices are edging up. On expectations that China will provide support to bolster the country's sluggish economy. Of course China, the biggest importer, the biggest oil importer in the world.
Shares of Baytex energy are currently trading up 1.7%. South of the border, let's take a look at the S&P 500 were Wall Street is trading higher.
As a corporate earnings season continues.
Investors digest a couple of more earnings today from some big US banks. The S&P 500 is currently trading up nearly 19 points.
To the tune of.
4%. And it's really trading up on what has been a solid start to the earnings season so far.
Take a look at the tech heavy NASDAQ comps index, also trading in positive territory, the index is currently up about 61 points or .4%.
Taking a look at some of the big movers, shares of Carvana are moving higher today.
The online car dealer said it secured a deal to refinance its debt.
Also reporting its best ever point profit and issued an optimistic forecast.
Currently the stock is up more than 31% this point.
Some other big movers today, Tesla, shares of Tesla are also making some moves in her guilt early market trading, the electric carmaker announced the start of its long awaited Cybertruck. Of course Tesla will also be report reporting its second-quarter earnings on deck after the polls. Shares of Tesla are up 1.2% at this time. And that's your market update.
Markets have held up better-than-expected so far this year. But will that trend continue?
Joining us now to discuss is John Eade, Pres. of Argus research. John, thanks for joining us.
>> Will thank you Anthony for having me on the program today. I'm honoured to be here.
>> Let's start with a look back on what we've seen so far from your initial forecast. What is played out and what has surprised you so far?
>> Anthony, we started the year here at Argus a bit contrarian. We were one of the few research shops that was actually predicting a good year for stocks.
Everybody was here, in the US, still thinking about the 19% decline in the US and the S&P 500 last year.
Really forecasting that trend forward.
Just continued challenges for stocks.
We have looked at the stock returns, going back years and years and have found that it is very rare, Anthony, that you have two negative years in US stocks in a row.
So we thought that this year would actually be a more normal year.
You know, not a great year, not 20% up.
But maybe eight, 10, 12% which is your average year here in US stocks.
We thought that would be driven by the Federal Reserve moving to the sidelines after its rate hike campaign inflation trending downward from the peaks of 9% last Summer.
An economy that stayed in a growth mode and so far, we have hit on all of those outlooks and then the fourth factor is the corporate earnings.
You mentioned in your introduction remarks, we were in the second-quarter earnings. Year and so far, so good.
We have had to negative earnings quarters in a row here in the US.
That's an earnings recession.
We may be ready to leave that earnings recession here in this second-quarter or if not, if not the second-quarter, I would think almost for certain the third quarter.
> As I mentioned we are early into the second quarter and so far so good. More to come. Let's go through some potential scenarios for the markets going forward.
You have three different outcomes for us.
Talk to us about your basic case for the markets for the rest of this year to start.
> Okay. So, let's start out and say that the first half returns, let's call it 15% for the S&P 500. So, what we have found is when the US stocks increase at double-digit rates in the first half of the year, they tend to go on and continue the rally in the second half as well.
In fact, the fourth quarter is usually the strongest quarter that we see in all of the quarters in the US. So, our base case is that the bull market continues but we don't rise at the same pace that we did in the first half.
You know, maybe that market adds another 5% and ends up for the year 18, 19, 20%.
Which is an awesome year for stocks but is stronger first half then the second half.
And that would depend on things like you know, maybe GDP growth, slows a little bit in the second half, perhaps the Federal Reserve hikes rates. Not just one more time but a couple of more times and we have already seen some real good news on CPI. We have thought that the core CPI could fall to 5% by the end of the year.
It's already at 4.8%.
So we have beaten that expectation and that 4.
8% is down, like I said earlier, almost 9% this time a year ago. So that has been a very sharp decline in inflation and while we expect inflation to moderate, looking ahead, we don't think it's going to decline at that same rate over these next few months. So those are some of the things that we were thinking about and looking for as we think about our base case for stocks for the second half of the year.
>> Okay.
Go ahead.
> In a bullish case… Maybe inflation does continue to decline faster than expected.
These earnings come in better than Wall Street analysts are expecting.
And we get to the point where,, the US has entered a bull market again. It's up 20% from its bear market lows but it has not yet reached the previous peak that we had in, I guess it was January 2022. So in a bullish scenario, we see, maybe, a 25% leaning in stocks again driven by low inflation, lower interest rates and better earnings and we reach an all-time high in the S&P 500. That would be a bullish case, we think, in the US for the second half.
>> Okay. So you have the bullish case.
Talk to us about the bearish scenario.
>> Okay. Gotta cover all the ground Anthony, for sure. So, again, going back to that study we did on the returns in the market, remember the first half returns were up 15%.
Never in the second half of the year, when the market is been the strong, have we ended up with a full year negative return.
So, I think returns overall for the year are going to be positive for the S&P 500 in 2023.
But, there is a chance that we pull back from these current levels where we are.
You know, maybe give back 10% of the gains or so and what would cause that? Well… You know, maybe inflation stabilizes here and transportation costs don't fall. Shelter costs don't fall. Food costs stay high.
So you get a leveling off of inflation instead of a decline in inflation. Or even in a worst-case scenario, maybe inflation kicks back up again.
The Federal Reserve met a month ago. While they did not hike rates at that meeting, they indicated that they plan on hiking rates up to two more times here in 2023.
So, they have a meeting at the end of this month.
We think there is going to be one hike and then we don't think that they're going to hike twice, but the Fed's notes from the meeting indicated that they are willing to go at least two more times.
So to more rate hikes, you know, a negative impact on the consumer sector of the economy, we have seen the rate hikes have an impact on the housing market.
We've seen the rate hikes have an impact on the manufacturing market.
We have seen the rate hikes have an impact on the export market.
They have not yet had an impact on the consumer sector.
Which is the biggest part of the US economy. Well okay, maybe two more rate hikes do you have that impact on the consumer sector. And unemployment heads back up towards 5%.
The economy dips into a recession.
Those are some of the bearish case scenarios.
Not entirely likely… But you know, again, the Federal Reserve is that they are not done raising interest rates and that can still have a negative impact on the consumer sector of the economy.
> When you talk about inflation, and it being sticky, talk to us about wage gains.
Because wages have been coming down but they have not been coming down as quickly as possible.
What are your thoughts there as well?
>> That's a great point Anthony. Let's go back may be eight or 10 years when there was really, almost no wage growth at all.
Maybe 1%, 2%, year-over-year wage growth.
Barely ahead of inflation which, at that time, was very low. And then you can transfer that to the. Right after the pandemic.
When people were bringing employees back on. A lot of employees did not want to go back to work. So companies had to pay employees more.
We started to see five, almost 6% year-over-year wage growth for a period of time in 2021 and into early 2022.
So that has cooled off a little bit.
The numbers now around 4.1 or 4.2%. That is well ahead of what the Fed would like to see. The Fed would like to see all measures of inflation down at 2%. But 4% is better for the economy and for inflation then 6% was a year ago.
And we do expect that trend to move towards 3%, perhaps by the end of next year. So, wage growth is moderating but is still a little bit higher than what the Federal Reserve would like to see.
>> A great start to the discussion and we will get your questions with the market trend with John Eade, Pres. of market research at Argus research in just a moment.
You can get in touch with us any time by emailing MoneyTalkLive@td.com.
Now here's an update on the top stories in the business world today and a look at how the markets are trading.
BC Port workers have resumed their strike after their union rejected a tentative four-year deal announced last week.
The renewed strike shuts down more than 30 port terminals across the province.
The greater Vancouver Board of trade estimates the strike resulted in the disruption of $9.9 billion worth of goods.
Business groups one it could take until late September or longer to fold to fully clear the backlog of cargo that is been piling up since Canada Day.
Goldman Sachs reported a significant drop in second-quarter profit following write-downs in its consumer and asset management businesses.
The U.S. Bank said quarterly profit fell to $1.2 billion, down 58% from a year ago.
Goldman Sachs is one rather the only one among its big business Bank appears to miss second-quarter earnings expectations.
Activision Blizzard says it has extended the deadline for the close of his $69 billion takeover by Microsoft to October 18. The two companies had originally agreed to complete the transaction by July 18, but pushback from US and UK regulators delayed the takeover. The extension was made after the you the UK regulators delayed its review of the deal until August 29.
And here's how the main benchmark index in Canada is trading. Currently the TSX index is still up, just over 60.4.3 percent.
Turning to the United States, the S&P 500 Index, the broad-based index is also up just over 20 points.
We will call that about half a percent.
All right.
We are back with John Eade, Pres. of Argus research taking your questions about market trends. We will talk about your first question here what is your outlook for inflation?
>> So, Anthony, our outlook for inflation is lower.
Here in the US are consumer price index peaked last July at 9%.
The Federal Reserve was behind the curve at that point.
You know, if it started to raise interest rates… Maybe interest rates, the federal funds rate was around two or 2 1/2%.
But as you can see on this chart right here, the Fed has finally moved ahead of the inflation curve. That purple line is the federal funds rate and it is now higher then the core PCE rates. That was the case for much of the time in previous decades.
But certainly, the Fed fell behind the inflation curve right after the pandemic hit.
Now, with interest rates above inflation, we think that is going to keep a cap on overall economic growth and that's going to push inflation lower.
The Federal Reserve wants to see inflation down at 2% by most core measures. It's around 3 1/2, 4% right now. I would think that by the end of this year, we should see it around 3 1/2% and maybe 3% by the end of 2024. So we think it's gonna go lower.
But it's not gonna come down as rapidly as it has from 9% over this past year.
Now, the Federal Reserve wants a spread of at least 100 basis points between its federal funds rate and that court rate of inflation.
If it raises the federal funds rate at its next meeting, that's going to put the federal funds rate at around 5.25", 5 1/2.
So, if we see that core PCE inflation move down the 3 1/2% next year, the Federal Reserve will have some room to lower rates actually.
And reverse this recent trend of raising rates.
But that is down the road and we are not there yet.
>> We are not there yet. We do have, of course, the Fed meeting up next week.
Investors will be watching closely.
Turning to the next question, this is on markets.
Marcus is held up this year, is the bear market over?
>> We say yes.
And this last bear market that we had was maybe not as bad as the average bear market. It's been about eight bear markets since World War II. This last one, the decline was 25% from peak to trough.
Typically the markets fall about 40%.
But it was a little bit longer than normal. Typically, a bear market is going to last around 16 months and this last bear market was, I think it was actually measured out to 17 months and that was during the period with the Federal Reserve first started to hike interest rates still when it took that pause about a month ago.
We think that bear market of 2022 is over.
The, kind of, bright line that we use is once stocks here in the US rise 20% from the bear market lows, then a new bull market has begun. That's the common definition.
There is another definition, Anthony, it's a bit more conservative.
That definition is that the bull market does not start until you have recaptured all the gains that were lost in the bear market.
And if that would be the case, I think a new bull market would start around S&P 5000. But we are using the 20% up definition and, you know, it doesn't feel like a bear market anymore. I can tell you that.
> And that's a great clarification as well about a bear market. So thanks for that.
We will turn the next question. This is timely of course.
We are in the middle of second-quarter earnings season.
Just at the start of it. What should we expect out of the earnings season?
>> Several things to look for here Anthony.
The US has not technically entered an economic recession even the last year there were two quarters in a row in which our gross domestic product declined.
Usually that is the definition of a recession.
But, the economic I guess, geniuses, did not call it a recession and that probably had to do with a very robust employment environment we have here in the US.
Unemployment at 3.6% is very low. So that is the economic outlook.
You are asking about earnings and in fact, we are in an earnings recession. Not an economic recession. An earnings recession.
But we have had two quarters in a row of overall earnings decline for the S&P 500.
Which is a major benchmark down here. So we are in the third quarter now and the expectations coming into the quarter were for another quarter of earnings decline.
Maybe a 5% decline. But Anthony, as you know very well, companies always beat earnings expectations right?
. So if the earnings expectations, the consensus forecast is for a 5% decline, companies are not going to report such a sharp decline. And there is a chance, I think we are seeing here, that the number may actually turn positive for the quarter.
And so, the two quarter earnings recession would be over here in this quarter with maybe one or 2% growth. But let me drill down for a second.
This sector that is really weighing on earnings growth here right now is the energy sector.
The energy sector was a contributor of most of earnings for 2021 and 2022.
If you remember, about a year and 1/2 ago, oil was $120 a barrel.
>> I do remember that.
>> During the pandemic it was about $40 a barrel.
So the oil companies are making a lot of profits and contributing to profit growth.
Meanwhile, the rest of the economy was falling apart.
Right? The consumer sector. Nobody was going out of their homes and so forth. But here we are, now the energy sector is coming up against very difficult comparisons.
Oil is at $120 a barrel anymore. It is not. It is $75 a barrel. So the energy profits going to be down year-over-year.
But some of the other sectors, the bigger sectors, the broader sectors, are really contributing. Like the tech sector. We have gotten good tech earnings out of companies like Oracle already.
More to come later today. Consumer discretionary is another sector that is expected to do well.
So the overall number is going to be depressed by this one sector energy but I think the breath of earnings contribution is going to be better from other sectors during this. And that's going to be a positive factor, carrying the markets forward into the second half of this year.
> Okay. As always, make sure you do your own research before making any investment decisions and we will get back to your questions for John Eade on market trends in just a moment. A reminder that you can get in touch of this any time by emailing moneytalklive@td.com.
Now let's get to today's educational segment.
There are multiple types of trades you can make on WebBroker and here to take us through how they work as Caitlin Cormier, Client Education Instructor with TD Direct Investing.
>> There are main types of orders that investors often use in order to complete their security transactions.
There are a market order and limit order.
Let's quickly go through those two different types of orders today and figure out what the differences are between the two.
Let's start with the market order. What a market order is is essentially you are putting in an order to buy or sell a security at whatever the current market price is.
So that type of order, essentially, the most important thing is we are looking to get our order executed. We have done our research, we know we want to buy or sell this particular security. The most important thing is to go through with that transaction. Secondary to us this price.
We have an idea of what the current prices, what its trading for. But there is no guarantee in a market order as to what our price will be.
So when we hit submit, we are not really sure what price our orders are to be filled out.
Let's go ahead and hop into WebBroker and see how we would be able to actually process paper just like that. We are going to click on the "buy, sell" button.
We will choose a security to purchase.
All right. So in this process we will go ahead and choose whatever our quantity is.
So in this case I'm looking to buy 100 shares. We have a price tag of market good until just the day. That is probably fine for the situation because, as I mentioned, most often these types of orders are sold almost immediately. Therefore we don't really have to leave it open for longer than the current trading day.
All right. And that is as simple as a market order is. We just have to put in the number of shares, confirm the price type and go ahead with the actual purchase from there.
The second type we will talk about is the limit order.
The limit order is a little different from a market order. Because with a market we don't know the price that we are going to be able to fill the purchase with. With a limit order, we actually have control over the price.
With a limit order, we actually set a limit price which is the minimum that we are willing to accept in order to sell a security.
Or the maximum we are willing to pay in order to buy a security.
So the benefit of a limit order is that price security that we have a bit of control over what price or at least what minimum or maximum price that the transaction is going to be competing for.
Now, with assorted type, the downside is the execution.
So, the benefit of market order is one of the downsides of the limit order. There is no guarantee that the price will actually fall or rise to your limit price that you have set. Therefore, price, the execution of this particular order type is less gearing to be guaranteed as the market order is. Let's hop into WebBroker. To see how we can put this order type through. So say I'm going to choose the different security here.
Again, I'm going to go as if I was buying.
I can choose 100 again. Whatever number of security I would like. This time I'm just going to choose the limit price type.
I'm going to type in the maximum that I'm willing to pay in order to buy this security. So in this case, let's just say I would like the price of the security to drop to $13. So I'm gonna set a limit price of 13.
Because of the fact the price might not drop down that far today, I have the option to extend the good till date to a future date. So I can choose any data like or "good till cancelled"… Whichever kind of option I choose.
So if I choose, let's just say, I want to leave this open for the next two weeks.
I can go ahead and choose that.
And one last thing that you do have the option of doing is the "all or none" option.
Without "all or none" essentially what it means is your order can be filled over multiple days.
For example today can get 50 shares build of that limit price and then tomorrow, maybe I can get another 50 shares filled.
If that were to happen, I would be charging two separate Commission fees. So Commission P today and it can be should be tomorrow.
For my order being executed over two days.
If I were to choose all or none, which is only available with you a Securities, "all or none", what will happen is if there is not 100 shares available the limit price will not executed all. It will only execute of all shares are available at price.
The downside of this, of course, is it adds another layer or reason why your order would not be filled. So kind of, you are less likely to have your order executed if you do choose to follow through. One last page to quickly check out with the limit order and market order is our "order status" page.
This spray can come to see where the orders have been filled or partially filled.
Through market order you can see what price or prices your order has been filled out. With limit orders you can see again, if they were partially filled or not and change or cancel them if you so choose.
So that's a quick rundown of the market of limit orders. If you have more questions about these order types of these other order types that are available, check out our different videos on Learning Center as well as YouTube and they will go over those different subjects. Until next time.
>> Our thanks to Caitlin Cormier, Client Education Instructor at TD Direct Investing.
We are back with John Eade taking your questions about market trends.
We have another question here on bonds.
What is the outlook for bonds? Do long-duration bonds have the greatest upside?
>> Okay that's a good question.
Let's go through the yield curve.
Starting at the end. Anthony, I will talk about US bonds okay?
>> Okay.
>> The benchmark on the US is the 10 year treasury bond and during the pandemic, it reached all-time lows, Anthony. You could say there was a bubble in U.S. Treasury bonds. I think the yield got down below 1.5%.
Maybe down around 1.2%. For 10 years.
Right?
Now, it's about 4%. Maybe 3.8%.
So it almost more than tripled over these past couple of years. I think the next move for the 10 year treasury bond is lower. Not higher.
If it's it for now, I don't see it going six. I see it going more toward three and maybe below three into next year. And a couple of reasons for that.
One, inflation, we have talked a lot about inflation now. And if inflation is going to be going lower, lower than bond yields will be headed lower too. So inflation is one factor. But another factor is, you know, the US bonds position against all other sovereign debt. Right? Let's say you're in Japan and you want to buy sovereign debt.
There is no yield on a Japanese bond right? It's 0%. So there is going to be demand from Japan for sovereign debt and they are going to buy a bond that is yielding, you know, 3.8, 4%. Same is true in Germany. Yields are very low in Germany.
They are low in Switzerland. So there are a lot of global investors who are interested in purchasing US debt. And I expect that it's demand. Demand and supply, that demand to push 10 year yields lower okay? So, if it's a 4% now, maybe it is at 3% in the next year. All right?
And then at the short end of the yield curve, you know, we are looking at the federal funds rate. The federal funds rate is between five and 5.25" now here in the US. They are going to hike it next week.
It's gotta be 5.25" 5%.
I am not sure that the Federal Reserve is going to be reducing interest rates four times right? For 25 basis point cuts over this next year.
For times 25 basis cuts.
I'm not sure they will go to that yield curve but I might take a look at the two year yields.
The two year yields are what the market anticipates the federal funds rate is going to be in a couple of years. And I think there might be a bigger move on the two years then at the very short and, the three month federal funds and maybe even more at the long ends. So, I think I would not go to long on duration. Although I do anticipate those 10 year yields to fall.
But maybe look at the two year for more of a trading and income opportunity.
>> Okay. So now we are going to go from bonds to artificial intelligence for the next question.
How are you viewing the investment potential for AI?
>> So we came out of being the beginning of the year with 10 investment themes each year.
One of our themes this year was AI. And we were looking at it's really, from different links of the value chain right?
AI basically it occurs in the cloud. In the cloud is not actually in the cloud.
It's in these giant data centre's that are operating all over the continent.
All over the country. And there are a couple of real estate investment trusts that run these data centre's here in the US.
So that's one way to think about the cloud.
Another way of thinking about the cloud would be the big software companies that are generating so much of the excitement and products built on artificial intelligence.
And those are going to be the ones that are really that, you know, $3 trillion level and market.
It's a well-known story that Microsoft Google and Amazon are the leaders there.
And then you've got you know, kind of the products that are driving this artificial intelligence and the programming and the crunching.
Those are the semiconductor companies.
That is not been lost on the US government either. Pres. Biden a few years ago signed the chips ACT!. To set aside $600 million to help companies build manufacturing factories here in the US. So you have the data centre is, the semiconductor companies and you've got the software riders as three different links in the chain. Then you can even go into other sectors and maybe look at healthcare and see how artificial intelligence is informing drug discovery or robotics and surgery.
So we do think that there is a long runway for artificial intelligence.
We think it makes companies smarter. It makes products better. It makes operations run more efficiently and more profitably.
We are very early in artificial intelligence and there are a lot of different ways to think about investing in it.
>> Okay. We will move to the next question from our viewers. What's the outlook for dividend growth? John?
>> It's better Anthony. It's better than it was last year. Typically, in the S&P 500, dividends grow may be a little bit faster than overall GDP. So the average dividend is growing two or 3% a year.
At Argus, one of our investment themes, pretty much year in and year out, is to try to identify those companies that are growing their dividends at a very rapid rate here, year after year after year. And the line we draw is 10%.
We look for companies that grow their dividends at least two double-digit rate for five years in a row.
And if a company can do that, we think it is sending off three important signals: one a company has a strong of balance sheet to pay a dividend, number two, management was aware that dividends are an important part of shareholder returns. Not just capital gains.
Dividends are important too.
And number three, if a company is increasing its dividend at a 10% rate, when the rest of the market is increasing the dividend, at a two or 3% rate, well… That faster dividend growing company I think, is saying to the markets that they are pretty confident about their year rather their near-term business prospects and the idea then is that earnings are going to grow at a faster rate than the overall market earnings two.
So this year, we are in the earnings recession, probably have that 2 to 3% average dividend growth rate. Next year, on the other side of the recession, maybe earnings grow 45% but the ones we are looking for include in our polling in our portfolios and our other vilest of the ones going their dividends 10%, year in year out year after year.
>> Okay we will get back to your questions with John Eade about market trends in just a moment.
As always make sure to do your own research before making any investment decisions. Now let's get you an update on the markets.
Aside from an update on the markets, how do you look at TD's advanced dashboard. A platform designed for active traders through TD Direct Investing. Right now we are looking at the heat map function which gives you a view of the market movers on the TSX 60 by both price and volume.
Taking a look, at some of the green on the screen right now. We see some strength and some energy names.
Algonquin power utilities. Power utilities rather getting some bids today. Shopify, taking a look at some of the tech stocks, Shopify getting some bids up at the top.
The top corner as well. Just below Shopify we are seeing some strength and Telus.
Telus Corporation.
Stocks there. We are seeing some red in some of the other areas.
Suncor is getting, we are seeing some selling there.
Why do we move over to the S&P 100… Take a look at some of the movers there.
Taking a look at the S&P 100, AT&T in the green. You see at the bottom of the middle screen, getting some positive bids there.
Up more than 7% at this point. We are also seeing some strength in Amazon.
Some other tech related names at the top there. You can see Meta shares also seeing some bids. Apple as well.
Some tech stops though rather tech stocks are in the red. Microsoft Google, shares of Google and Nvidia are also trading down at this point.
And you can find more information on the TD advanced dashboard by visiting td.com/advanced dashboard. We are back in with John Eade Pres. of Argus research.
The next question (Anthony reads the question) John what's your take?
>> So Anthony.
I would say no.
I will also say I'm not entirely sure what a recession is anymore. Right?
Last year in the US here, we had two negative quarters of GDP.
In the past, that is always been a recession. Not this time.
Right?
Maybe that's because unemployment was so low, 3.6%, and even if it had been a recession, Anthony. I will say it would not have been a very deep recession.
Maybe a 1% decline in GDP. And you think back to deeper recessions like the financial crisis in 2008, 2009 when GDP contracted at 10% and the unemployment rate in the US when up to 10%… That unemployment rate is 3.6% now.
Our forecasts call for very modest economic growth in the US in 2023. Maybe about one of the half percent. I think the first quarter was 1.
3%.
Maybe a little bit above 2% in the second quarter.
Then these high interest rates finally do slow down consumer spending in the second half of the year.
I think it stays positive Anthony.
But if it does turn negative, I would think, like last year, it would be very slightly negative. Modestly negative and not deeply negative in a deep recession like we saw in 2008, 2009.
> Great discussion John.
Thank you so it's for joining us.
> Thank you Anthony my pleasure.
>> Our thanks to John Eade, Pres. of Argus research. And be sure to always do your own research before making any investment decisions.
Stay tuned on Thursday, Nicole Ewing, Director of Tax and Estate Planning with TD Wealth will be our guest taking your questions about personal finance.
And a reminder that you can get a head start by emailing us at moneytalklive@td.
com. That's all the time for today. Thanks for watching and we will see you tomorrow take care.
[music]
[music] >> Hello I'm Anthony Okolie in for Greg Bonnell and welcome to MoneyTalk Live brought you by TD Direct Investing.
Every day we will be joined from guests across TD and beyond. We we'll take you through it's moving the markets and answer questions about investing.
Coming up on today's show we will be joined by Argus research Pres. John Eade discussed the possible scenarios he sees ahead for the markets.
And in today's WebBroker education segment, Caitlin Cormier will take us through the different order types available on WebBroker.
And here's how you can get in touch with us. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to our guest today let's get you an update on the markets.
We will start here in Canada where the markets are opening up into positive territory. The S&P TSX Composite Index is currently trading up 67 points. About .
3% of course driving the early gains our energy and technology stocks. Also the positive inflation data that we received on Tuesday as fuel in hopes that the Bank of Canada is nearing the end of its interest rate hiking cycle.
Let's take a look at some of the big movers today.
One of the big movers today is Baytex energy Corporation and shares of Baytex are currently trading higher.
Of course today crude prices are edging up. On expectations that China will provide support to bolster the country's sluggish economy. Of course China, the biggest importer, the biggest oil importer in the world.
Shares of Baytex energy are currently trading up 1.7%. South of the border, let's take a look at the S&P 500 were Wall Street is trading higher.
As a corporate earnings season continues.
Investors digest a couple of more earnings today from some big US banks. The S&P 500 is currently trading up nearly 19 points.
To the tune of.
4%. And it's really trading up on what has been a solid start to the earnings season so far.
Take a look at the tech heavy NASDAQ comps index, also trading in positive territory, the index is currently up about 61 points or .4%.
Taking a look at some of the big movers, shares of Carvana are moving higher today.
The online car dealer said it secured a deal to refinance its debt.
Also reporting its best ever point profit and issued an optimistic forecast.
Currently the stock is up more than 31% this point.
Some other big movers today, Tesla, shares of Tesla are also making some moves in her guilt early market trading, the electric carmaker announced the start of its long awaited Cybertruck. Of course Tesla will also be report reporting its second-quarter earnings on deck after the polls. Shares of Tesla are up 1.2% at this time. And that's your market update.
Markets have held up better-than-expected so far this year. But will that trend continue?
Joining us now to discuss is John Eade, Pres. of Argus research. John, thanks for joining us.
>> Will thank you Anthony for having me on the program today. I'm honoured to be here.
>> Let's start with a look back on what we've seen so far from your initial forecast. What is played out and what has surprised you so far?
>> Anthony, we started the year here at Argus a bit contrarian. We were one of the few research shops that was actually predicting a good year for stocks.
Everybody was here, in the US, still thinking about the 19% decline in the US and the S&P 500 last year.
Really forecasting that trend forward.
Just continued challenges for stocks.
We have looked at the stock returns, going back years and years and have found that it is very rare, Anthony, that you have two negative years in US stocks in a row.
So we thought that this year would actually be a more normal year.
You know, not a great year, not 20% up.
But maybe eight, 10, 12% which is your average year here in US stocks.
We thought that would be driven by the Federal Reserve moving to the sidelines after its rate hike campaign inflation trending downward from the peaks of 9% last Summer.
An economy that stayed in a growth mode and so far, we have hit on all of those outlooks and then the fourth factor is the corporate earnings.
You mentioned in your introduction remarks, we were in the second-quarter earnings. Year and so far, so good.
We have had to negative earnings quarters in a row here in the US.
That's an earnings recession.
We may be ready to leave that earnings recession here in this second-quarter or if not, if not the second-quarter, I would think almost for certain the third quarter.
> As I mentioned we are early into the second quarter and so far so good. More to come. Let's go through some potential scenarios for the markets going forward.
You have three different outcomes for us.
Talk to us about your basic case for the markets for the rest of this year to start.
> Okay. So, let's start out and say that the first half returns, let's call it 15% for the S&P 500. So, what we have found is when the US stocks increase at double-digit rates in the first half of the year, they tend to go on and continue the rally in the second half as well.
In fact, the fourth quarter is usually the strongest quarter that we see in all of the quarters in the US. So, our base case is that the bull market continues but we don't rise at the same pace that we did in the first half.
You know, maybe that market adds another 5% and ends up for the year 18, 19, 20%.
Which is an awesome year for stocks but is stronger first half then the second half.
And that would depend on things like you know, maybe GDP growth, slows a little bit in the second half, perhaps the Federal Reserve hikes rates. Not just one more time but a couple of more times and we have already seen some real good news on CPI. We have thought that the core CPI could fall to 5% by the end of the year.
It's already at 4.8%.
So we have beaten that expectation and that 4.
8% is down, like I said earlier, almost 9% this time a year ago. So that has been a very sharp decline in inflation and while we expect inflation to moderate, looking ahead, we don't think it's going to decline at that same rate over these next few months. So those are some of the things that we were thinking about and looking for as we think about our base case for stocks for the second half of the year.
>> Okay.
Go ahead.
> In a bullish case… Maybe inflation does continue to decline faster than expected.
These earnings come in better than Wall Street analysts are expecting.
And we get to the point where,, the US has entered a bull market again. It's up 20% from its bear market lows but it has not yet reached the previous peak that we had in, I guess it was January 2022. So in a bullish scenario, we see, maybe, a 25% leaning in stocks again driven by low inflation, lower interest rates and better earnings and we reach an all-time high in the S&P 500. That would be a bullish case, we think, in the US for the second half.
>> Okay. So you have the bullish case.
Talk to us about the bearish scenario.
>> Okay. Gotta cover all the ground Anthony, for sure. So, again, going back to that study we did on the returns in the market, remember the first half returns were up 15%.
Never in the second half of the year, when the market is been the strong, have we ended up with a full year negative return.
So, I think returns overall for the year are going to be positive for the S&P 500 in 2023.
But, there is a chance that we pull back from these current levels where we are.
You know, maybe give back 10% of the gains or so and what would cause that? Well… You know, maybe inflation stabilizes here and transportation costs don't fall. Shelter costs don't fall. Food costs stay high.
So you get a leveling off of inflation instead of a decline in inflation. Or even in a worst-case scenario, maybe inflation kicks back up again.
The Federal Reserve met a month ago. While they did not hike rates at that meeting, they indicated that they plan on hiking rates up to two more times here in 2023.
So, they have a meeting at the end of this month.
We think there is going to be one hike and then we don't think that they're going to hike twice, but the Fed's notes from the meeting indicated that they are willing to go at least two more times.
So to more rate hikes, you know, a negative impact on the consumer sector of the economy, we have seen the rate hikes have an impact on the housing market.
We've seen the rate hikes have an impact on the manufacturing market.
We have seen the rate hikes have an impact on the export market.
They have not yet had an impact on the consumer sector.
Which is the biggest part of the US economy. Well okay, maybe two more rate hikes do you have that impact on the consumer sector. And unemployment heads back up towards 5%.
The economy dips into a recession.
Those are some of the bearish case scenarios.
Not entirely likely… But you know, again, the Federal Reserve is that they are not done raising interest rates and that can still have a negative impact on the consumer sector of the economy.
> When you talk about inflation, and it being sticky, talk to us about wage gains.
Because wages have been coming down but they have not been coming down as quickly as possible.
What are your thoughts there as well?
>> That's a great point Anthony. Let's go back may be eight or 10 years when there was really, almost no wage growth at all.
Maybe 1%, 2%, year-over-year wage growth.
Barely ahead of inflation which, at that time, was very low. And then you can transfer that to the. Right after the pandemic.
When people were bringing employees back on. A lot of employees did not want to go back to work. So companies had to pay employees more.
We started to see five, almost 6% year-over-year wage growth for a period of time in 2021 and into early 2022.
So that has cooled off a little bit.
The numbers now around 4.1 or 4.2%. That is well ahead of what the Fed would like to see. The Fed would like to see all measures of inflation down at 2%. But 4% is better for the economy and for inflation then 6% was a year ago.
And we do expect that trend to move towards 3%, perhaps by the end of next year. So, wage growth is moderating but is still a little bit higher than what the Federal Reserve would like to see.
>> A great start to the discussion and we will get your questions with the market trend with John Eade, Pres. of market research at Argus research in just a moment.
You can get in touch with us any time by emailing MoneyTalkLive@td.com.
Now here's an update on the top stories in the business world today and a look at how the markets are trading.
BC Port workers have resumed their strike after their union rejected a tentative four-year deal announced last week.
The renewed strike shuts down more than 30 port terminals across the province.
The greater Vancouver Board of trade estimates the strike resulted in the disruption of $9.9 billion worth of goods.
Business groups one it could take until late September or longer to fold to fully clear the backlog of cargo that is been piling up since Canada Day.
Goldman Sachs reported a significant drop in second-quarter profit following write-downs in its consumer and asset management businesses.
The U.S. Bank said quarterly profit fell to $1.2 billion, down 58% from a year ago.
Goldman Sachs is one rather the only one among its big business Bank appears to miss second-quarter earnings expectations.
Activision Blizzard says it has extended the deadline for the close of his $69 billion takeover by Microsoft to October 18. The two companies had originally agreed to complete the transaction by July 18, but pushback from US and UK regulators delayed the takeover. The extension was made after the you the UK regulators delayed its review of the deal until August 29.
And here's how the main benchmark index in Canada is trading. Currently the TSX index is still up, just over 60.4.3 percent.
Turning to the United States, the S&P 500 Index, the broad-based index is also up just over 20 points.
We will call that about half a percent.
All right.
We are back with John Eade, Pres. of Argus research taking your questions about market trends. We will talk about your first question here what is your outlook for inflation?
>> So, Anthony, our outlook for inflation is lower.
Here in the US are consumer price index peaked last July at 9%.
The Federal Reserve was behind the curve at that point.
You know, if it started to raise interest rates… Maybe interest rates, the federal funds rate was around two or 2 1/2%.
But as you can see on this chart right here, the Fed has finally moved ahead of the inflation curve. That purple line is the federal funds rate and it is now higher then the core PCE rates. That was the case for much of the time in previous decades.
But certainly, the Fed fell behind the inflation curve right after the pandemic hit.
Now, with interest rates above inflation, we think that is going to keep a cap on overall economic growth and that's going to push inflation lower.
The Federal Reserve wants to see inflation down at 2% by most core measures. It's around 3 1/2, 4% right now. I would think that by the end of this year, we should see it around 3 1/2% and maybe 3% by the end of 2024. So we think it's gonna go lower.
But it's not gonna come down as rapidly as it has from 9% over this past year.
Now, the Federal Reserve wants a spread of at least 100 basis points between its federal funds rate and that court rate of inflation.
If it raises the federal funds rate at its next meeting, that's going to put the federal funds rate at around 5.25", 5 1/2.
So, if we see that core PCE inflation move down the 3 1/2% next year, the Federal Reserve will have some room to lower rates actually.
And reverse this recent trend of raising rates.
But that is down the road and we are not there yet.
>> We are not there yet. We do have, of course, the Fed meeting up next week.
Investors will be watching closely.
Turning to the next question, this is on markets.
Marcus is held up this year, is the bear market over?
>> We say yes.
And this last bear market that we had was maybe not as bad as the average bear market. It's been about eight bear markets since World War II. This last one, the decline was 25% from peak to trough.
Typically the markets fall about 40%.
But it was a little bit longer than normal. Typically, a bear market is going to last around 16 months and this last bear market was, I think it was actually measured out to 17 months and that was during the period with the Federal Reserve first started to hike interest rates still when it took that pause about a month ago.
We think that bear market of 2022 is over.
The, kind of, bright line that we use is once stocks here in the US rise 20% from the bear market lows, then a new bull market has begun. That's the common definition.
There is another definition, Anthony, it's a bit more conservative.
That definition is that the bull market does not start until you have recaptured all the gains that were lost in the bear market.
And if that would be the case, I think a new bull market would start around S&P 5000. But we are using the 20% up definition and, you know, it doesn't feel like a bear market anymore. I can tell you that.
> And that's a great clarification as well about a bear market. So thanks for that.
We will turn the next question. This is timely of course.
We are in the middle of second-quarter earnings season.
Just at the start of it. What should we expect out of the earnings season?
>> Several things to look for here Anthony.
The US has not technically entered an economic recession even the last year there were two quarters in a row in which our gross domestic product declined.
Usually that is the definition of a recession.
But, the economic I guess, geniuses, did not call it a recession and that probably had to do with a very robust employment environment we have here in the US.
Unemployment at 3.6% is very low. So that is the economic outlook.
You are asking about earnings and in fact, we are in an earnings recession. Not an economic recession. An earnings recession.
But we have had two quarters in a row of overall earnings decline for the S&P 500.
Which is a major benchmark down here. So we are in the third quarter now and the expectations coming into the quarter were for another quarter of earnings decline.
Maybe a 5% decline. But Anthony, as you know very well, companies always beat earnings expectations right?
. So if the earnings expectations, the consensus forecast is for a 5% decline, companies are not going to report such a sharp decline. And there is a chance, I think we are seeing here, that the number may actually turn positive for the quarter.
And so, the two quarter earnings recession would be over here in this quarter with maybe one or 2% growth. But let me drill down for a second.
This sector that is really weighing on earnings growth here right now is the energy sector.
The energy sector was a contributor of most of earnings for 2021 and 2022.
If you remember, about a year and 1/2 ago, oil was $120 a barrel.
>> I do remember that.
>> During the pandemic it was about $40 a barrel.
So the oil companies are making a lot of profits and contributing to profit growth.
Meanwhile, the rest of the economy was falling apart.
Right? The consumer sector. Nobody was going out of their homes and so forth. But here we are, now the energy sector is coming up against very difficult comparisons.
Oil is at $120 a barrel anymore. It is not. It is $75 a barrel. So the energy profits going to be down year-over-year.
But some of the other sectors, the bigger sectors, the broader sectors, are really contributing. Like the tech sector. We have gotten good tech earnings out of companies like Oracle already.
More to come later today. Consumer discretionary is another sector that is expected to do well.
So the overall number is going to be depressed by this one sector energy but I think the breath of earnings contribution is going to be better from other sectors during this. And that's going to be a positive factor, carrying the markets forward into the second half of this year.
> Okay. As always, make sure you do your own research before making any investment decisions and we will get back to your questions for John Eade on market trends in just a moment. A reminder that you can get in touch of this any time by emailing moneytalklive@td.com.
Now let's get to today's educational segment.
There are multiple types of trades you can make on WebBroker and here to take us through how they work as Caitlin Cormier, Client Education Instructor with TD Direct Investing.
>> There are main types of orders that investors often use in order to complete their security transactions.
There are a market order and limit order.
Let's quickly go through those two different types of orders today and figure out what the differences are between the two.
Let's start with the market order. What a market order is is essentially you are putting in an order to buy or sell a security at whatever the current market price is.
So that type of order, essentially, the most important thing is we are looking to get our order executed. We have done our research, we know we want to buy or sell this particular security. The most important thing is to go through with that transaction. Secondary to us this price.
We have an idea of what the current prices, what its trading for. But there is no guarantee in a market order as to what our price will be.
So when we hit submit, we are not really sure what price our orders are to be filled out.
Let's go ahead and hop into WebBroker and see how we would be able to actually process paper just like that. We are going to click on the "buy, sell" button.
We will choose a security to purchase.
All right. So in this process we will go ahead and choose whatever our quantity is.
So in this case I'm looking to buy 100 shares. We have a price tag of market good until just the day. That is probably fine for the situation because, as I mentioned, most often these types of orders are sold almost immediately. Therefore we don't really have to leave it open for longer than the current trading day.
All right. And that is as simple as a market order is. We just have to put in the number of shares, confirm the price type and go ahead with the actual purchase from there.
The second type we will talk about is the limit order.
The limit order is a little different from a market order. Because with a market we don't know the price that we are going to be able to fill the purchase with. With a limit order, we actually have control over the price.
With a limit order, we actually set a limit price which is the minimum that we are willing to accept in order to sell a security.
Or the maximum we are willing to pay in order to buy a security.
So the benefit of a limit order is that price security that we have a bit of control over what price or at least what minimum or maximum price that the transaction is going to be competing for.
Now, with assorted type, the downside is the execution.
So, the benefit of market order is one of the downsides of the limit order. There is no guarantee that the price will actually fall or rise to your limit price that you have set. Therefore, price, the execution of this particular order type is less gearing to be guaranteed as the market order is. Let's hop into WebBroker. To see how we can put this order type through. So say I'm going to choose the different security here.
Again, I'm going to go as if I was buying.
I can choose 100 again. Whatever number of security I would like. This time I'm just going to choose the limit price type.
I'm going to type in the maximum that I'm willing to pay in order to buy this security. So in this case, let's just say I would like the price of the security to drop to $13. So I'm gonna set a limit price of 13.
Because of the fact the price might not drop down that far today, I have the option to extend the good till date to a future date. So I can choose any data like or "good till cancelled"… Whichever kind of option I choose.
So if I choose, let's just say, I want to leave this open for the next two weeks.
I can go ahead and choose that.
And one last thing that you do have the option of doing is the "all or none" option.
Without "all or none" essentially what it means is your order can be filled over multiple days.
For example today can get 50 shares build of that limit price and then tomorrow, maybe I can get another 50 shares filled.
If that were to happen, I would be charging two separate Commission fees. So Commission P today and it can be should be tomorrow.
For my order being executed over two days.
If I were to choose all or none, which is only available with you a Securities, "all or none", what will happen is if there is not 100 shares available the limit price will not executed all. It will only execute of all shares are available at price.
The downside of this, of course, is it adds another layer or reason why your order would not be filled. So kind of, you are less likely to have your order executed if you do choose to follow through. One last page to quickly check out with the limit order and market order is our "order status" page.
This spray can come to see where the orders have been filled or partially filled.
Through market order you can see what price or prices your order has been filled out. With limit orders you can see again, if they were partially filled or not and change or cancel them if you so choose.
So that's a quick rundown of the market of limit orders. If you have more questions about these order types of these other order types that are available, check out our different videos on Learning Center as well as YouTube and they will go over those different subjects. Until next time.
>> Our thanks to Caitlin Cormier, Client Education Instructor at TD Direct Investing.
We are back with John Eade taking your questions about market trends.
We have another question here on bonds.
What is the outlook for bonds? Do long-duration bonds have the greatest upside?
>> Okay that's a good question.
Let's go through the yield curve.
Starting at the end. Anthony, I will talk about US bonds okay?
>> Okay.
>> The benchmark on the US is the 10 year treasury bond and during the pandemic, it reached all-time lows, Anthony. You could say there was a bubble in U.S. Treasury bonds. I think the yield got down below 1.5%.
Maybe down around 1.2%. For 10 years.
Right?
Now, it's about 4%. Maybe 3.8%.
So it almost more than tripled over these past couple of years. I think the next move for the 10 year treasury bond is lower. Not higher.
If it's it for now, I don't see it going six. I see it going more toward three and maybe below three into next year. And a couple of reasons for that.
One, inflation, we have talked a lot about inflation now. And if inflation is going to be going lower, lower than bond yields will be headed lower too. So inflation is one factor. But another factor is, you know, the US bonds position against all other sovereign debt. Right? Let's say you're in Japan and you want to buy sovereign debt.
There is no yield on a Japanese bond right? It's 0%. So there is going to be demand from Japan for sovereign debt and they are going to buy a bond that is yielding, you know, 3.8, 4%. Same is true in Germany. Yields are very low in Germany.
They are low in Switzerland. So there are a lot of global investors who are interested in purchasing US debt. And I expect that it's demand. Demand and supply, that demand to push 10 year yields lower okay? So, if it's a 4% now, maybe it is at 3% in the next year. All right?
And then at the short end of the yield curve, you know, we are looking at the federal funds rate. The federal funds rate is between five and 5.25" now here in the US. They are going to hike it next week.
It's gotta be 5.25" 5%.
I am not sure that the Federal Reserve is going to be reducing interest rates four times right? For 25 basis point cuts over this next year.
For times 25 basis cuts.
I'm not sure they will go to that yield curve but I might take a look at the two year yields.
The two year yields are what the market anticipates the federal funds rate is going to be in a couple of years. And I think there might be a bigger move on the two years then at the very short and, the three month federal funds and maybe even more at the long ends. So, I think I would not go to long on duration. Although I do anticipate those 10 year yields to fall.
But maybe look at the two year for more of a trading and income opportunity.
>> Okay. So now we are going to go from bonds to artificial intelligence for the next question.
How are you viewing the investment potential for AI?
>> So we came out of being the beginning of the year with 10 investment themes each year.
One of our themes this year was AI. And we were looking at it's really, from different links of the value chain right?
AI basically it occurs in the cloud. In the cloud is not actually in the cloud.
It's in these giant data centre's that are operating all over the continent.
All over the country. And there are a couple of real estate investment trusts that run these data centre's here in the US.
So that's one way to think about the cloud.
Another way of thinking about the cloud would be the big software companies that are generating so much of the excitement and products built on artificial intelligence.
And those are going to be the ones that are really that, you know, $3 trillion level and market.
It's a well-known story that Microsoft Google and Amazon are the leaders there.
And then you've got you know, kind of the products that are driving this artificial intelligence and the programming and the crunching.
Those are the semiconductor companies.
That is not been lost on the US government either. Pres. Biden a few years ago signed the chips ACT!. To set aside $600 million to help companies build manufacturing factories here in the US. So you have the data centre is, the semiconductor companies and you've got the software riders as three different links in the chain. Then you can even go into other sectors and maybe look at healthcare and see how artificial intelligence is informing drug discovery or robotics and surgery.
So we do think that there is a long runway for artificial intelligence.
We think it makes companies smarter. It makes products better. It makes operations run more efficiently and more profitably.
We are very early in artificial intelligence and there are a lot of different ways to think about investing in it.
>> Okay. We will move to the next question from our viewers. What's the outlook for dividend growth? John?
>> It's better Anthony. It's better than it was last year. Typically, in the S&P 500, dividends grow may be a little bit faster than overall GDP. So the average dividend is growing two or 3% a year.
At Argus, one of our investment themes, pretty much year in and year out, is to try to identify those companies that are growing their dividends at a very rapid rate here, year after year after year. And the line we draw is 10%.
We look for companies that grow their dividends at least two double-digit rate for five years in a row.
And if a company can do that, we think it is sending off three important signals: one a company has a strong of balance sheet to pay a dividend, number two, management was aware that dividends are an important part of shareholder returns. Not just capital gains.
Dividends are important too.
And number three, if a company is increasing its dividend at a 10% rate, when the rest of the market is increasing the dividend, at a two or 3% rate, well… That faster dividend growing company I think, is saying to the markets that they are pretty confident about their year rather their near-term business prospects and the idea then is that earnings are going to grow at a faster rate than the overall market earnings two.
So this year, we are in the earnings recession, probably have that 2 to 3% average dividend growth rate. Next year, on the other side of the recession, maybe earnings grow 45% but the ones we are looking for include in our polling in our portfolios and our other vilest of the ones going their dividends 10%, year in year out year after year.
>> Okay we will get back to your questions with John Eade about market trends in just a moment.
As always make sure to do your own research before making any investment decisions. Now let's get you an update on the markets.
Aside from an update on the markets, how do you look at TD's advanced dashboard. A platform designed for active traders through TD Direct Investing. Right now we are looking at the heat map function which gives you a view of the market movers on the TSX 60 by both price and volume.
Taking a look, at some of the green on the screen right now. We see some strength and some energy names.
Algonquin power utilities. Power utilities rather getting some bids today. Shopify, taking a look at some of the tech stocks, Shopify getting some bids up at the top.
The top corner as well. Just below Shopify we are seeing some strength and Telus.
Telus Corporation.
Stocks there. We are seeing some red in some of the other areas.
Suncor is getting, we are seeing some selling there.
Why do we move over to the S&P 100… Take a look at some of the movers there.
Taking a look at the S&P 100, AT&T in the green. You see at the bottom of the middle screen, getting some positive bids there.
Up more than 7% at this point. We are also seeing some strength in Amazon.
Some other tech related names at the top there. You can see Meta shares also seeing some bids. Apple as well.
Some tech stops though rather tech stocks are in the red. Microsoft Google, shares of Google and Nvidia are also trading down at this point.
And you can find more information on the TD advanced dashboard by visiting td.com/advanced dashboard. We are back in with John Eade Pres. of Argus research.
The next question (Anthony reads the question) John what's your take?
>> So Anthony.
I would say no.
I will also say I'm not entirely sure what a recession is anymore. Right?
Last year in the US here, we had two negative quarters of GDP.
In the past, that is always been a recession. Not this time.
Right?
Maybe that's because unemployment was so low, 3.6%, and even if it had been a recession, Anthony. I will say it would not have been a very deep recession.
Maybe a 1% decline in GDP. And you think back to deeper recessions like the financial crisis in 2008, 2009 when GDP contracted at 10% and the unemployment rate in the US when up to 10%… That unemployment rate is 3.6% now.
Our forecasts call for very modest economic growth in the US in 2023. Maybe about one of the half percent. I think the first quarter was 1.
3%.
Maybe a little bit above 2% in the second quarter.
Then these high interest rates finally do slow down consumer spending in the second half of the year.
I think it stays positive Anthony.
But if it does turn negative, I would think, like last year, it would be very slightly negative. Modestly negative and not deeply negative in a deep recession like we saw in 2008, 2009.
> Great discussion John.
Thank you so it's for joining us.
> Thank you Anthony my pleasure.
>> Our thanks to John Eade, Pres. of Argus research. And be sure to always do your own research before making any investment decisions.
Stay tuned on Thursday, Nicole Ewing, Director of Tax and Estate Planning with TD Wealth will be our guest taking your questions about personal finance.
And a reminder that you can get a head start by emailing us at moneytalklive@td.
com. That's all the time for today. Thanks for watching and we will see you tomorrow take care.
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